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Facts
The assessee, despite high-value commodity exchange transactions, did not file an income return, leading the AO to reopen the assessment u/s 147 and make an addition of Rs. 11,56,732/- based on 1% estimated profit. The assessee denied involvement in National/Multi Commodity Exchange transactions. The CIT(A) subsequently dismissed the assessee's appeal ex-parte due to non-compliance.
Held
The Tribunal noted the ex-parte dismissal by the CIT(A) and, following a similar precedent, set aside the CIT(A)'s order. The case was remanded back to the CIT(A) for de novo adjudication, providing the assessee a final opportunity to substantiate its claims on merits. However, the Tribunal also clarified that if the assessee fails to comply or prove non-involvement, the additions will be sustained.
Key Issues
Whether the ex-parte dismissal of the appeal by the CIT(A) for non-compliance was justified; and whether the matter should be remanded to provide the assessee a final opportunity to prove non-involvement in commodity exchange transactions.
Sections Cited
147, 148, 271(1)(c), 144, 44AD
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Income Tax Appellate Tribunal, RAIPUR BENCH “SMC”, RAIPUR
Before: SHRI PARTHA SARATHI CHAUDHURY
आदेश / ORDER
PER PARTHA SARATHI CHAUDHURY, JM
The captioned appeal preferred by the assessee emanates from the order of the Ld.CIT(Appeals)/NFAC, dated 13.03.2025 for the assessment year 2011-12 as per the grounds of appeal on record.
The brief facts in this case are that though the assessee during the year under consideration made a transaction of Rs.23,13,46,531/- under National/Multi Commodity Exchange-Contract but had not filed his return of income. Accordingly, the A.O recorded reasons to believe that income of the assessee had escaped assessment and thus, reopened the case of the assessee u/s. 147 of the Income Tax Act, 1961 ( for short ‘the Act’). Notice u/s. 148 of the Act was issued to the assessee on 26.03.2018.
During the course of the assessment proceedings, the assessee has given details of intraday transactions of purchase of Rs.18,36,019/- and sales of Rs.18,37,329/- showing profit of Rs.1,311/-. It is also stated by the assessee that he had not carried out any transaction in National/Multi Commodity Exchange during the year under consideration. However, the A.O did not accept the contention of the assessee and made an addition of Rs.11,56,732/-. For the sake of completeness, the relevant observation of the A.O is culled out as follows:
“As per the AIR information available in this office the assessee has made 1052 transactions of purchases and sales of Rs.23,13,46,531/- under the National Commodity and Derivatives Exchange Limited. Therefore the reply of the assessee is not acceptable. The total transactions for purchases and sales have been made by the assessee at Rs.23,13,46,531/-. On the basis of these the transactions of sales comes approximately to Rs.11,56,73,265/- (50% of the total value of transactions as the total value is comprised of the both purchases and sales). The approximate net profit @ 1% on the sales of Rs.11,56,73,265/-is taken and determined at Rs.11,56,732/- and added to total income of the assessee. Penalty proceedings u/s 271(1)(c) is initiated separately for furnishing inaccurate particulars of income and concealment of income.”
That being aggrieved, the assessee carried the matter in appeal before the Ld. CIT(Appeals)/NFAC. It is noted that as per Para 4 of the impugned order, the Ld.CIT(Appeals)/NFAC vide an ex-parte order had dismissed the appeal of the assessee due to non-compliance by the assessee. For the sake of clarity, Para 4 of the Ld.CIT(Appeals)/NFAC order is culled out as follows:
“4. Decision: 4.1 The appeal was filed by the appellant on 14.02.2019 against the Assessment order u/s.144 of the Act dated 03.12.2018. In connection to the appeal, opportunities were provided to the appellant to substantiate his grounds of appeal on following dates: Sr. Date of hearing (s) No. 1. 12.03.2021 2. 19.02.2025 3. 04.03.2025 Against all these notices there was no response from the appellant, as has been brought out above, it is evident that the appellant is not interested in filing any details during the appellate proceedings and avail the opportunity under the principle of natural justice. In response to the notices issued, even adjournment was not sought. In such situation, the only conclusion which can be drawn is that the appellant is not interested in pursuing the appeal.”
The Ld. Counsel for the assessee submitted that if a final opportunity is given before the Ld. CIT(Appeals)/NFAC, then the assessee shall file affidavit regarding the fact that he does not have any account with National Commodity Stock Exchange and his PAN was misused. The Ld. Counsel further submitted that the assessee has not filed original return of income, however in response to the notice u/s.148 of the Act, the assessee had filed return of income showing profit and gains through presumptive profits u/s.44AD of the Act. As regards the query from the Bench regarding capital gain shown by the assessee in short term gain from securities taxable, it was submitted by the Ld. Counsel that this transaction was made with Ventura Securities Ltd. and not with National Commodity Stock Exchange.
In this regard, the Ld. Sr. DR has fairly conceded that the matter may be investigated and examined before the first appellate authority providing one final opportunity to the assessee.
I have heard the submissions of the parties herein and carefully considered the contents in the documents/material available on record.
As per the aforesaid examination of the entire spectrum of the matter in the interest of natural justice, I deem it fit and proper to provide one final opportunity to the assessee to represent his case on merits before the Ld. CIT(Appeals).
In the overall spectrum of an ex-parte order being passed due to non-compliance by the assessee before the Ld.CIT(Appeals)/NFAC, I refer to the order of the ITAT, “Division Bench”, Raipur in the cases of Brajesh Singh Bhadoria Vs. Dy./ACIT, Central Circle-2, Naya Raipur, IT(SS)A Nos.1 to 6, 8 & 9/RPR/2025, dated 20.03.2025 wherein the Tribunal had dealt with similar issue on the same parameters of ex-parte order passed by the Ld. CIT(Appeals)/NFAC and remanded the matter back to the file of the Ld. CIT(Appeals)/NFAC.
Respectfully following the aforesaid order on the same parity of reasoning, I am providing final opportunity to the assessee to represent his case before the first appellate authority. Accordingly, I set-aside the order of the Ld. CIT(Appeals)/NFAC and remand the matter back to its file for denovo adjudication as per law while complying with the principles of natural justice.
Before parting with this matter it is stated that if the assessee fails to comply with hearing notices before the Ld.CIT(Appeals)/NFAC or the assessee fails to substantiate his claim that he has not carried out any transaction in National/Multi Commodity Exchange during the year under consideration, the additions are to be sustained.
As per the above terms, the grounds of appeal raised by the assessee stands allowed for statistical purposes.
In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in open court on 20th day of June, 2025.